In what and how to invest in 2022. Here is what the brokerage houses BOŚ, Trigon and Ipopema recommend

AB, 11 bit studios, Alior Bank, Lotos, PKO BP and Ten Square Games – these are the shares of companies that are on the top picks lists for 2022 of various brokerage houses.

As usual, at the end of the year, the boldest brokerage houses published their top picks for the next year – the best elections on the Polish stock market. It is always worth getting acquainted with such a list, because the selection is made by experts and they do it on the basis of a fundamental analysis. We decided to collect the top picks of BOŚ, Trigon and Ipopema brokerage houses to see which stocks are currently most recommended for 2022.

Top picks for 2022 – which companies repeat themselves

First, let’s look at broker choices.

Top picks Ipopemy for 2022: PKO BP, Pekao, Alior, ING BSK, PZU, CEZ, Lotos, InPost, Dino, Huuuge, Ten Square Games, 11 bit studios, Orange Polska, Poltreg, Ryvu Therapeutics, Mo-BRUK, Wittchen, Atal , Develia.

Among the top picks indicated by DM BOŚ are: 11 bit studios, AB, Alior, Asbis, Creepy Jar, Grodno, LPP, Mirbud, Neuca, PKN Orlen, PKO BP and Selvita.

Top broker picks Trigon to: AB, Auto Partner, Benefit Systems, Budimex, Comarch, Cyfrowy Polsat, Famur, Ferro, Handlowy, Inter Cars, KGHM, Kruk, Lotos, LPP, Newag, Onco Arendi, PCF Group, Rawlplug, Ten Square Games, Votum, Wielton and XTB.

No company appeared on all three lists. However, there are a few that have repeated on two and these are:

  • AB – One of the largest European distributors of products of the world’s largest producers of modern technologies. The company operates in Poland, the Czech Republic and Slovakia, selling products to over 16,000 business partners. Its capitalization is currently around PLN 832 million, and P / E = 6.42.
  • 11 bit studios – Game producer from Warsaw, who was very successful with the titles of “This War of Mine” and “Frostpunk”. PLN 1.31 billion is the company’s market value, and the P / E ratio = 58. Currently, it is working on three titles, the market is slowly getting to know the details.
  • Alior Bank – A universal bank that can benefit greatly from interest rate increases or an increase in the volume of retail loans. Its valuation on the stock exchange is currently PLN 7.12 billion, with P / E = 14.14.
  • Lotus – The refinery, which – as Ipopema analysts emphasize – has better results than PKN Orlen, more attractive indicators (also Orlen has a discount due to the political risk and the future structure of the conglomerate after the merger with Lotos). Currently, Lotos is valued at PLN 11.3bn, with P / E = 5.13.
  • PKO BP – Repeat from Alior: a universal bank that can benefit heavily from interest rate increases or an increase in the volume of retail loans. At the same time, it is much larger than Alior, its valuation on the stock exchange is currently PLN 55.7 billion with C / Z = 17.
  • Ten Square Games – One of the largest and most important companies producing games on the Polish stock exchange, which has had a weak period (the price dropped by 35% in a year), but in the first half of 2022 it plans a soft launch of 4 new titles, including a sports game adapted to American users . The company’s capitalization is PLN 2.56 billion, P / E = 18.

Interestingly, Ipopema presented its short types for 2022. These are: CD Projekt, PGE, Tauron, KGHM, JSW, mBank, Mabion, Śnieżka, Astarta Holding. This is also worth considering. The presence of JSW and KGHM in this group is particularly interesting in view of the expected further increases in the prices of copper and coke. “Commodity prices have already reached their peak and higher inflation and costs will have an impact on operating margins,” Ipopema analysts explain.

See also: How to Account for Decarbonization in Company Valuation

Be careful with banks and the energy sector, selection will be needed

And what are the forecasts of these brokerage houses for the entire Polish stock market? According to Trigon analysts, inflation positively influences the results of companies as long as it does not contribute to a slowdown in real demand. “In the scenario of high inflation in the first half of 2022, with a still relatively good macro, companies may surprise with their results. We assume that the market is already seeing macro risks for the second half of the year, but we believe that it plays them down too early on stocks. We are counting on strong seasons of results for Q4’21 and Q1’22, which will push year-round expectations even higher, and then we see a better time to start underweighting the stock “- they stated.

WSE (19)

In the opinion of Ipopema analysts, 2022 may bring normalization in the stock market, and not necessarily a crash, as many expect. “If the signaled acceleration of Fed restraint on bond purchases and the associated earlier interest rate hikes in 2022 did not plunge the markets into anxiety or panic, this would be an ideal scenario for central banks. However, dangers lurk. As long as inflation remains uncomfortably high, central banks may be less inclined to pursue dovish monetary policy, even at the risk of markets suffering broader, more severe falls. Investors’ willingness to buy, although still strong, will also be tested by a marked slowdown in China’s GDP growth, and Russian threats to Ukraine may end in a destabilizing round of sanctions and counter-sanctions, ”they indicated.

Therefore, Ipopema analysts recommended maintaining a selective approach when selecting companies for the portfolio, at the same time pointing to a limited growth potential for the WIG20 index (to around 2,365 points, i.e. by around 7% since the publication of top picks).

In terms of sectors, Ipopema analysts are cautious about banks and mining, recommend a selective approach to the retail sector and game developers, and underweight the energy sector. They have a positive attitude towards telecoms, housing developers and parts of the biotechnology sector. “It seems that the game is playing against valuations below long-term averages and higher rates, which intensified the positive sentiment towards the entire sector for most of 2021 (WIG-Banks +77.3% vs the WIG30 index +17.3% YTD), are behind us. We estimate that the market consensus, which has risen by 22% since the first interest rate hike, already takes into account the impact of higher rates of 2.5%, ”they indicated.

In the biotechnology sector, they prefer PolTreg (due to the most attractive valuation) and Ryvu (they see a growing probability of concluding a partnering agreement next year). “We are still positive about Celon Pharma, although we believe that commercialization of Falkieri will be delayed until the second half of the year. 2022, and OncoArendi, but in the case of this company, we do not see short-term triggers. Mabion remains our least preferred biotech company, because in our opinion, the production contract with Novavax is overly optimistic by the market, while the company has yet to obtain financing for increasing the production capacity of MabionCD20, “stated Ipopema analysts.

See also: Apple shares, Amazon, Alphabet, Meta Facebook – NOT overvalued, claims famous investor Bill Miller

About Eric Wilson

The variety offered by video games never ceases to amaze him. He loves OutRun's drifting as well as the contemplative walks of Dear Esther. Immersing himself in other worlds is an incomparable feeling for him: he understood it by playing for the first time in Shenmue.

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